When national emergencies or disasters such as floods and hurricanes occur, supplies and services need to be procured by the federal government and rushed to the affected area. To expedite this process, the System for Award Management (SAM) contains a Disaster Response Registry in accordance with FAR Subpart 4.11 and FAR Subpart 26.2 listing those contractors who are willing to provide debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief supplies and/or services.

A company must be registered in the System for Award Management (SAM) at https://www.sam.gov for federal contracts and other procurement opportunities in accordance with FAR Subpart 4.11, to be included in the Disaster Response Registry. On average, it takes 2-3 days to properly register and have a company’s registration become active in SAM. It may take longer.

During the registration process, companies must indicate that they want to participate in the Disaster Response Registry and provide the required information on the Disaster Response Information page within the “Assertions” module. Once a company’s registration is activated, it will be added to the Disaster Response Registry, and federal contracting officers will be able to locate the company through the search function within the Disaster Response Registry.

You can get FREE help with your registration by contacting the supporting Federal Service Desk (FSD). In addition, if you are located in the U.S. and its outlying areas, you can get FREE support from your local Procurement Technical Assistance Center (PTAC), an official resource for government contracting assistance. Check the PTAC website at http://www.aptac-us.org/find-a-ptac to locate your closest PTAC.

Remember, it is FREE to register and maintain your registration in SAM. If you get an email from any address that does not end in .gov or .mil, be cautious. If you get an email, text message, or phone call asking for money or payment of any amount, be very cautious. These parties do not represent the U.S. government. You engage third party vendors at your own risk.

A former senior manager of the Metropolitan Atlanta Rapid Transit Authority (MARTA) has been charged with conducting a false invoice scheme that resulted in MARTA paying more than $500,000 for maintenance work that was never performed and for funneling most of the money back into his personal bank accounts.

According to U.S. Attorney John A. Horn, the former MARTA executive, Joseph J. Erves “was entrusted to safeguard the taxpayer funds used to run our public transportation authority, and instead he is charged with stealing a half million dollars to buy a Porsche and other high-end purchases. This is a classic case where a public official’s short-term gain in stealing from taxpayers comes crashing down and ends with criminal charges.”

“The federal investigation and resulting federal charges against Mr. Erves will hopefully send a message to others that such ill-conceived schemes to redirect corporate or public funds to their own accounts is a criminal act with tough consequences. The FBI would like to thank the MARTA Police and their investigators for their invaluable assistance in getting this matter advanced for prosecution,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.

MARTA is the principal public transportation operator in the Atlanta metropolitan area, providing fixed rail and bus service to more than 500,000 passengers per weekday. Formed in 1965, MARTA is a multi-county governmental agency with a 2016 annual budget of more than $880 million.

From 1993 to 2017, Erves worked for MARTA, ultimately serving as its Senior Director of Operations. In that position, Erves oversaw the maintenance of all of MARTA’s buses and rail cars and had the authority to approve payments up to $10,000 to vendors for work performed on behalf of MARTA.

Beginning in or about 2010, Erves retained three different vendors purportedly to perform maintenance projects for MARTA, including repairing brake testing equipment and fixing various MARTA tools and equipment. From approximately June 2010 to December 2016, Erves had fake invoices prepared on behalf of the three vendors for more than 40 maintenance projects for which no work was performed.

Erves then used the false invoices as bases to authorize payments to the three vendors. In many cases, Erves personally approved payments to the vendors knowing that the vendors had not performed any work for MARTA.

After being paid, the three vendors funneled most of the money received from MARTA into Erves’s personal bank accounts. Subsequently, Erves used the money deposited into his accounts to pay personal expenses, such as multiple purchases at high-end department stores and the purchase of a Porsche 911. Based on Erves’s authority and representations, MARTA paid the three vendors more than $500,000 for maintenance projects where no worked was actually performed.

Erves, 52, of Lithonia, Georgia, has been charged in a criminal information with one count of Federal Program Theft. Erves is expected to plead guilty to the charge shortly after arraignment.

This case is being investigated by the Federal Bureau of Investigation and the MARTA Police Department. Assistant U.S. Attorneys Jeffrey W. Davis and Alison Prout are prosecuting the case.

Virginia-based contractor ADS Inc. and its subsidiaries have agreed to pay $16 million to settle allegations that they violated the False Claims Act by knowingly conspiring with and causing purported small businesses to submit false claims for payment in connection with fraudulently obtained small business contracts, the Department of Justice announced last week.

The settlement also resolves allegations that ADS engaged in improper bid rigging relating to certain of the fraudulently obtained contracts. The settlement with ADS ranks as one of the largest recoveries involving alleged fraud in connection with small business contracting eligibility.

In order to qualify as a small business, companies must meet defined eligibility criteria, including requirements concerning size, ownership, and operational control. The settlement with ADS resolves allegations that ADS, together with several purported small businesses that it controlled, fraudulently induced the government to award certain small business set-aside contracts by misrepresenting eligibility requirements. The purported small businesses affiliated with ADS include Mythics Inc., London Bridge Trading Co. Ltd., as well as MJL Enterprises LLC, which falsely claimed to be an eligible service-disabled veteran-owned company, and SEK Solutions LLC and Karda Systems LLC, both of which falsely claimed to qualify as socially or economically disadvantaged businesses under the Small Business Administration’s 8(a) Business Development Program. ADS and its affiliates allegedly concealed the companies’ affiliations with ADS and knowingly made misrepresentations concerning the size of the businesses and their eligibility as service-disabled or 8(a) qualified businesses. Finally, the settlement resolves allegations that ADS engaged in illegal bid rigging schemes that inflated or distorted prices charged to the government under certain contracts.

The settlement with ADS resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuit was filed in federal district court in the District of Columbia by Ameliorate Partners LLP. As part of today’s resolution, the whistleblower will receive approximately $2.9 million.

The settlement is the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the District of Columbia and the Eastern District of Virginia, the Small Business Administration’s Office of Inspector General, and the General Services Administration’s Office of Inspector General. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

A contractor providing intelligence and training services to the Defense Department billed luxury cars to the government, sought reimbursements for the salaries of well-connected secretaries who did little in the way of actual work and exceeded statutory caps for executives’ pay, according to a new audit.

All told, the Defense Contract Audit Agency (DCAA) questioned $50 million the British company New Century Consulting billed to the Pentagon, according to a report summarized in a letter from Sen. Claire McCaskill, D-Mo., to Defense Secretary Jim Mattis. The vehicles, including Porsches, a Bentley and an Aston Martin, were used exclusively by the CEO and other top executives at the company, DCAA found.

New Century operated as a subcontractor for Imperatis Corp., which has an extended history of problematic dealings with the federal government. Last year, Imperatis abruptly quit a cybersecurity contract it had with the Office of Personnel Management and the Homeland Security Department, citing “financial distress.” Defense contracted with Imperatis on its Legacy East project to provide “counterinsurgency intelligence experts” to train Afghani security forces.

On Friday, August 11, 2017, he was sentenced to four years and two months in federal prison, along with a $594,000 judgment against him, for his role in these fraudulent activities.

In Tampa, Florida, U.S. District Judge Charlene E. Honeywell imposed the sentencing terms on Michael Pirolo who earlier pled guilty to the charges against him. According to court documents, Pirolo served as the president of Government Contract Registry, Inc. (GCR), doing business as FEMA Contract Registration. He employed telemarketers who, during communications with victim-companies, falsely claimed that — for a fee — GCR would “register” the companies with FEMA to enable them to receive preference in obtaining contracts from FEMA. The GCR telemarketers’ communications were based on instructions and scripts that they received from Pirolo.

Specifically, the telemarketers falsely and fraudulently stated that for a one-time fee of $500, the customer would be registered with FEMA, and that this registration would place the customer on a list of “preferred” vendors. When the need for a vendor arose, GCR telemarketers falsely stated that FEMA would bypass the standard contract acquisition process, contact the registered victim-company, and then offer a no-bid contract. At times, Pirolo also instructed GCR telemarketers to go back to victim-companies that had already paid the $500 one-time fee and seek renewal and payment of another fraudulent $500 fee.

To further the scheme, the GCR telemarketers provided victim-companies with an online GCR form that requested the same information as a form on FEMA’s public website. In fact, FEMA does not charge a fee to companies to complete its vendor information form. The purpose of FEMA’s form is to assist the agency with market research in identifying viable possible vendors. FEMA’s form does not “register” companies. In actuality, registration in the federal government’s System for Award Management (SAM) is the government-wide vendor registration system. Vendors can register in SAM at no cost.

Once GCR telemarketers received the victim-companies’ information, GCR completed and submitted the online FEMA form that then enabled emails to be sent from FEMA to the victim-companies, giving the appearance that the companies had been “registered.” The FEMA emails gave GCR the appearance of legitimacy.

The approximate 1,200 victim-companies who were misled by this scheme paid GCR at least $604,500.

This case was investigated by the U.S. Department of Homeland Security, Office of Inspector General, and the General Services Administration, Office of Inspector General. It was prosecuted by Assistant United States Attorney Adam M. Saltzman.

GTPAC again reminds its clients and all other vendors that government agencies never charge a fee for registration in government databases. This includes vendor databases maintained by FEMA and the government-wide vendor database known as SAM.

While one scam — the company featured in this article — has been put out of business, there are others still in operation, so beware! To read more about questionable practices involving the FEMA and SAM vendor registration databases, click on the links below:

For no-cost assistance with registering in SAM — and no-cost help with many other aspects of government contracting — contact GTPAC at http://gtpac.org/contact-us. If your business is located outside the state of Georgia, feel free to contact the procurement technical assistance center (PTAC) nearest you. Locate the PTAC offices in your state at http://www.aptac-us.org/find-a-ptac.

A former owner of a government contracting company that serviced the Military Sealift Command (MSC) has been sentenced to 60 months in prison, and to pay a $15,000 fine. The sentence was handed down on July 28, 2017.

Joseph P. Allen of Panama City, Florida was charged with participation in a bribery conspiracy from approximately 1999 to 2014, in which he provided a contracting official at MSC with almost $3 million in bribes. Allen pled guilty on April 19 to one count of conspiracy to commit bribery.

According to the statement of facts included in Allen’s guilty plea, Allen conspired with a government contracting official, Scott B. Miserendino, Sr., to use Miserendino’s position at MSC to enrich themselves through bribery. Specifically, beginning in about 1999, Miserendino used his position and influence at MSC to facilitate and expand Allen’s company’s commission agreement with a third-party telecommunications company that sold maritime satellite services to MSC. Unknown to MSC or the telecommunications company, throughout the scheme, Allen paid half of the commissions he received from that telecommunications company to Miserendino as bribes.

For his role in the scheme, Miserendino was charged in a five-count indictment on May 4, with one count of conspiracy to commit bribery and honest services mail fraud, one count of bribery, and three counts of honest services mail fraud. His trial is currently scheduled for October 31, 2017. Note that the charges and allegations against Miserendino contained in the indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Norfolk offices of the FBI, the Defense Criminal Investigative Service and the Naval Criminal Investigative Service investigated the case.

Watch out for government contract-related scams!

Counselors from the Georgia Tech Procurement Assistance Center (GTPAC) hear from business people every week who tell us about schemes designed to take their money in return for little or nothing of value in their pursuit of government contracts.

One of the latest examples we received actually came from the purchasing office of the State of Oregon warning us to ignore a bogus email that invites vendors to update their contact information in order to receive details on upcoming contract opportunities. By clicking on the link, vendors would actually be uploading data about their company — such as bank routing information — which would be used for exploitation.

An Atlanta-area man pleaded guilty last Thursday (July 6, 2017) to federal charges he was part of an e-mail spoofing scheme that cost Sedgwick County, Kansas more than $566,000, District of Kansas U.S. Attorney Tom Beall said.

In his plea, James admitted that on Oct. 7, 2016, Sedgwick County sent approximately $566,088 to his Wells Fargo bank account. James transferred part of the money he received from Sedgwick County to a bank account in Shanghai, China, and part of the money to an account at Deutsche Bank in Bremen, Germany. James also spent some of the money.

In his plea, James denied that the fraud scheme was his idea. He said that on Sept. 23, 2016, he was contacted by a person identified in court records as A.H., who asked to deposit some money into James’ account at Wells Fargo. James said he knew A.H. was engaged in fraud, but James denied knowing that Sedgwick County was the victim.

In his plea, James said it was A.H. – or someone working with A.H. – who sent an email to Sedgwick County on Sept. 23, 2016, purporting to be from Cornejo and Sons, LLC, and requesting the county send future payments to a new account number at Wells Fargo. On Oct. 7, 2016, the county sent $566,088 to James’ account at Wells Fargo. The county learned later that Cornejo did not request the change of account and did not receive the payment.

Sentencing is set for Sept. 21. James faces a penalty of up to 20 years in federal prison and a fine up to $250,000.

Michael Allen Braun has been sentenced to 18 months in prison and $126,300 in restitution for “conspiracy to commit theft of honest services and wire fraud” and bribery of a public official.

In connection with the same case, co-conspirator Air Force Master Sergeant Cody Boone Covert was previously sentenced in February to 23 months in prison for conspiracy and bribery of a public official.

In January 2014, MSgt. Covert, 901st Aircraft Maintenance Squadron located at Hurlburt Field in Florida, was tasked by the Air Force with procuring specialized equipment in support of C-130 Special Operations Aircraft. Braun, who owned the company Trans Global Storage Solutions, conspired with Covert to obtain a contract from the Air Force. Prior to the solicitation of the contract, Braun agreed to provide Covert 45% of the profit from the contract proceeds, if Covert ensured that Trans Global won the contract. Covert submitted a request to purchase the specialized equipment. Because Covert was the requester of the equipment, he was chosen to evaluate each proposal for technical acceptance. Subsequently, Covert recommended the Trans Global proposal be accepted. After Trans Global was fraudulently awarded the $126,300 contract from the Air Force via Covert’s inside influence, Covert and Braun split the proceeds. Covert pled guilty on October 28, 2016, and Braun pled guilty on January 12, 2017.

“Corruption in the government procurement process damages the public trust and ultimately degrades the warfighting mission of the Department of Defense,” commented Special Agent-in-Charge John F. Khin, Southeast Field Office, Defense Criminal Investigative Service. “DCIS, with our investigative partners and the U.S. Attorney’s Office, continues to pursue and bring to justice those contractors who defraud military programs, especially when it jeopardizes the safety of our brave men and women in uniform.”

The case was investigated by the Air Force Office of Special Investigations, the Defense Criminal Investigative Service, and the Defense Contract Audit Agency.

The U.S. Attorney for the Middle District of Georgia has announced that an indictment charging Isaac J. Culver, III, age 47, Lizella, Georgia, Dave Carty, age 48, Macon, Georgia, and their business, Progressive Consulting Technologies, Inc., with conspiracy to commit wire and mail fraud, ten counts of wire fraud, one count of mail fraud, and conspiracy to launder the proceeds of unlawful activity was unsealed on June 14, 2017.

The charges against Culver, Carty, and Progressive Consulting Technologies, Inc. stem from the sale of 15,000 Ncomputing devices to the Bibb County School District in 2012. Culver and Carty were arrested and made their initial appearances in the U.S. District Court on June 14th. They were released on $15,000 bond for each man.

Each of the charges against Culver, Carty, and Progressive Consulting Technologies, Inc. carry a maximum possible sentence of 20 years imprisonment. The fine on the conspiracy to launder the proceeds of unlawful activity carries a maximum fine of $500,000.00 or twice the value of the property involved in the transaction, whichever is greater. The other charges carry a maximum possible fine of $250,000.00 each.

The indictment is only an allegation of criminal conduct. Each person is presumed innocent until and unless proven guilty in a court of law.

This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service.